16 Mar 2011

Clayton Utz advises Origin on innovative $2.3bn entitlement offer

Sydney, 16 March 2011: Clayton Utz is the legal adviser to Origin Energy in its $2.3 billion pro rata renounceable entitlement offer announced to the market yesterday.

Clayton Utz's national head of Equity Capital Markets, Stuart Byrne, led the Clayton Utz Equity Capital Markets team that advised Origin Energy on the transaction, with support from senior associate Richard Knott.

The transaction follows Clayton Utz's role as advisers to Origin on its successful $3.25 billion acquisition of the NSW energy retail assets of Country Energy and Integral Energy, as well as the gentrader rights in respect of the Eraring power station, which completed on 1 March. Clayton Utz partners Graham Taylor (on the M&A aspects), Graeme Dennis (Energy and Resources) and Emma Covacevich (Due Diligence & M&A) led that transaction.

Origin's entitlement offer is being conducted using a new equity raising structure, a Pro Rata Accelerated Institutional, Tradeable Retail Entitlement Offer (PAITREO) developed by Merrill Lynch in consultation with Origin. Clayton Utz advised Origin throughout the deal process, working closely with Origin's management team and joint lead managers, Macquarie, Merrill Lynch and JP Morgan, and with regulators ASX and ASIC.

The structure of the PAITREO is innovative in that it retains the options available to shareholders under older accelerated renounceable entitlement offer structures, as well as giving retail shareholders the opportunity to trade their entitlements when Origin's shares recommence trading and for about two weeks from that time. The PAITREO incrementally enhances existing accelerated entitlement offer structures, for the first time enabling retail shareholders to trade their entitlements on ASX.

Lead partner Stuart Byrne said the Clayton Utz team enjoyed the opportunity to work with Origin on the deal. "This transaction marks another milestone in our relationship with Origin, for which we have provided legal support on a range of strategically significant transactions, most recently Origin's acquisitions of the Integral Energy and Country Energy retail businesses and the Eraring GenTrader arrangements. As legal advisers, it was particularly rewarding to work alongside Origin's team in bringing this latest deal to market which will refinance part of the debt funding for that acquisition and to strengthen Origin's balance sheet for investment in other growth opportunities."

Mr Byrne said the willingness in recent years of regulators ASX and ASIC to be open to new deal structures in the equity capital markets space was also a plus for our market.

"We were in particular impressed at the positive approach to developments like this taken by the ASX and ASIC, which helps to ensure that Australia continues to be viewed as an attractive place to raise capital," said Mr Byrne.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.